• |

    Mar. 20, 2025

Conflicts of Interest in an Evolving Landscape: Potential Areas of SEC Examination Risk for GP‑Led Secondary Transactions

Over the last several years, GP‑led secondary transactions and continuation funds have experienced dramatic growth. In a market environment characterized by fundraising challenges, high interest rates and diminished M&A activity, GP‑led secondaries offer sponsors a flexible and unique tool to manage competing strategic demands by offering liquidity to existing investors while preserving the sponsor’s ability to optimize the value of existing “trophy” portfolio companies. However, the conflicted nature of GP‑led secondaries has garnered attention from the SEC and other regulatory authorities in recent years, including in the since-vacated private fund adviser rules. In particular, the SEC’s emphasis in its 2025 examination priorities on ensuring that advisors “adequately mitigate and fairly disclose conflicts of interest” suggests that GP‑led secondaries will be an area of continued focus in future SEC examinations and enforcement activity irrespective of the changing U.S. administration. In a guest article, Willkie Farr & Gallagher attorneys Nathaniel Marrs, Matthew Block and Morgan Aveni explore several potential ways in which GP‑led secondaries may garner greater SEC scrutiny in the future, including as to conflicts of interest in the auction process, the adequacy of LP advisory committee consents, the information parity between all types of participating investors and the equitable allocation of transaction expenses. See “SEC 2025 Examination Priorities Feature Essential Compliance Concerns, Emerging Technologies and Several Notable Omissions” (Dec. 12, 2024).

CCO Hiring Process: Typical Timeline and Sample Interview Questions (Part Two of Two)

When fund managers finally decide to either newly fill their CCO role or upgrade their current personnel, the timeline and process can prove somewhat daunting. Finding the elusive “ideal” candidate can feel like searching for a needle in a haystack, both as to how long it takes and the difficulty of sifting through a crowded field of candidates. As part of that process, managers need to use thoughtful, well-reasoned interview questions to discern which candidate has the necessary experience and traits to thrive in the role. This second article in a two-part series examines the timeline for filling the CCO role, key stakeholders involved in the interview process and an array of sample questions that firms can use to vet which candidate is bested suited for the role. The first article discussed current drivers and trends in the CCO market; the experience, skills and attributes firms are looking for in candidates; and the typical compensation ranges for CCOs based on a firm’s size and sophistication. See “What Fund Managers Should Consider When Hiring and Onboarding CCOs; Determining CCO Governance Structures (Part Two of Three)” (Apr. 21, 2020).

Key Features and Benefits of ILPA’s Updated Reporting Template and New Performance Template

On January 22, 2025, the Institutional Limited Partners Association (ILPA) released an updated reporting template (Reporting Template) and two versions – the gross-up methodology template and the granular methodology template – of a new performance template (together with the Reporting Template, the Templates), as well as guidance for each template. The Templates are the result of a robust process involving GPs, LPs, service providers and other stakeholders to create practical and valuable templates to improve standardization, transparency and comparability in the private funds industry. In addition, ILPA gathered a panel of experts directly involved in creating the Templates to discuss key features; explore the underlying rationale; and highlight expected benefits to GPs, LPs and fund administrators. Hosted by Neal Prunier, ILPA’s managing director, industry affairs, the program featured James Del Gaudio, managing director, head of private markets at the Pennsylvania Public School Employees’ Retirement System; Madeline Hon, solutions and implementations specialist at SEI; and Steven Taylor, operational due diligence senior analyst and partner at Albourne Partners. This article summarizes the experts’ insights and notable aspects of the Templates. See our two-part series: “Analysis and Market Response to ILPA’s Deal‑by‑Deal Waterfall Model LPA” (Sep. 15, 2020); and “Clarifying Updates to Non‑Economic Provisions in ILPA’s Model LPA” (Sep. 22, 2020).

Strategies U.K. Fund Managers Can Take to Prepare for an FCA Investigation

To deal with increasing compliance demands in the U.K., firms must be able to demonstrate robust compliance frameworks, address potential gaps and respond effectively to regulatory scrutiny. An ACA Group (ACA) program discussed practical strategies firms can implement to enhance their compliance programs and prepare for investigations by the U.K. Financial Conduct Authority. The panel was moderated by ACA director Ruth Avenell and featured ACA senior principal consultant Alex Bostantzoglou; Travers Smith partner Phil Bartram; and Lenka Vackova, CCO at Deltroit Asset Management. This article summarizes the key insights and takeaways from the program. For additional insights from ACA, see “2024 Survey Reveals Top Compliance Concerns and Common Industry Practices” (Sep. 19, 2024); and “Compliance Program Implementation: Compliance Calendars and Testing” (Sep. 5, 2024).

SEC Fines 12 Firms $63.1 Million in New Off‑Channel Communications Settlements

In yet another installment of its risk-based initiative (Initiative) to investigate registrants’ preservation of electronic communications on unapproved electronic devices and systems, the SEC reached a new round of settlements with 12 registrants for a total of $63.1 million in fines. As in other settlements under the Initiative, the latest respondents allegedly failed to preserve their employees’ off-channel communications and supervise employees with a view to preventing violation of SEC recordkeeping requirements. Separately, the SEC announced it had commenced a record-setting number of enforcement actions in the first quarter of its 2025 fiscal year, which ran from October through December 2024. This article discusses the increased enforcement activity and the eight settled enforcement orders. See our two-part series: “Could Emojis and Video Communications Be the Next Frontier of SEC Scrutiny?” (Sep. 19, 2024); and “Compliance Practices to Overcome Recordkeeping Challenges Caused by Emojis and Video Communications” (Oct. 3, 2024).

McDermott Welcomes Allison Scher Bernbach to Head Its PE Fund Regulatory Practice

Allison Scher Bernbach has joined the New York office of McDermott Will & Emery as a partner and head of the firm’s U.S. PE fund regulatory practice. Her practice focuses on counseling private fund advisers in navigating the increasingly complex regulatory landscape, including compliance with the Investment Advisers Act of 1940. For commentary from Bernbach, see “Recent SEC Enforcement Sweep and Risk Alert Highlight Weak Areas of Marketing Rule Compliance for Managers to Bolster” (Jun. 13, 2024); and “SEC Enforcement Action Scrutinizes Substantive Details of Level‑3 Valuation Policies and Procedures” (Jun. 29, 2023).

Most-Read Articles